Oracle loses its biggest Siebel implementation to SugarCRM

While enterprise IT giant Oracle wrestles with its cloud message and attempts to assert its Java IP against Google, the company has lost its biggest user of Siebel customer relationship management (CRM) to an open source supplier with a cloud pedigree.

Rival IBM has defected from Siebel Systems, owned by Oracle, to open source SugarCRM.

SugarCRM was founded in 2004 and has had $79.5m (£50m) in funding. It produces its flagship product in both open source and "commercial open source" flavours. The software can be used in Sugar's cloud, or on-premise, and its features include salesforce automation, marketing campaigns, customer support, collaboration, mobile CRM, social media tools and reporting.

IBM had been running a 67,000-seat Siebel implementation to manage sales, marketing and CRM globally since before Siebel System's $5.8bn (£3.2bn) acquisition by Oracle in 2005.

JMP Securities analyst Patrick Walravens said that there are three main reasons for the switch. In a research note, he wrote that: "First, IBM liked the open source nature of SugarCRM; second, the company liked SugarCRM's user interface; third, it provides a flexible, on-premise package, which offers more control and customisation than a pure software-as-a-service (SaaS) alternative, such as Salesforce.com."

In a recent interview, IBM CIO Jeanette Horan said that SaaS did not easily scale to a company of IBM's size with so many staff and operations worldwide to account for.

IBM's move follows reports that HP is also migrating from Siebel, opting to use cloud behemoth Salesforce.com instead. Microsoft, meanwhile, has replaced Siebel with its own DynamicsCRM.

The shift at IBM reflects the challenges that Oracle is facing on a number of fronts: the company has expanded so aggressively that it has fierce rivals in every sector of enterprise IT – most notably IBM, HP, SAP and Microsoft.

Oracle is also struggling to persuade customers to upgrade from a slew of acquired enterprise applications to its unified Oracle Fusion suite.

Its "poacher and gamekeeper" cloud message has also confused the marketplace. CEO Larry Ellison (pictured) famously dismissed cloud computing as a marketing con for years, while at the same time having investments in a variety of cloud start-ups run by ex-Oracle employees. Oracle has also acquired a number of cloud companies over the past 12 months, including RightNow, Taleo and, most recently, ClearTrial.

Rival SAP, meanwhile, has equally outspoken SuccessFactors CEO Lars Dalgaard onboard as head of its cloud division. And so with Google also at war with Oracle, Ellison is now fighting major battles on every front – not that that has ever bothered him.

However, the leap that Oracle customers are being asked to make from their legacy applications to Oracle Fusion is stimulating consideration of the alternatives, given the cost and effort involved in upgrading.

Although Oracle offers Fusion on a hosted basis, it is not a true cloud or SaaS play, according to Ahmed Limam, a former PeopleSoft and Oracle executive who is now a human resources software consultant.

"Everybody is trying to jump on the SaaS bandwagon by saying that they are SaaS. But to be able to say with a straight face that your offering is true SaaS, it has to be multi-tenant, single code line, with updates several times a year," said Limam.

"To be multi-tenant is a very arduous task, since you need to rewrite your whole offering... Fusion is not full multi-tenant. Just ask them what their SaaS price list is – they only have it for on-premise; proof that the offering is not ready for prime-time yet, after six years in the making!"

The latest iteration of SugarCRM supports 25 languages, provides native application support for more than 90 per cent of the world's smartphones and tablets, and extensive social CRM integration, including with LinkedIn, Twitter, Facebook, InsideView, LotusLive, WebEx, GoToMeeting and Google Docs.

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